In a world where more companies fail than flourish, there seems to be little consensus on the key success factors. Even companies with thrilling ideas, Ivy League-educated leadership and rounds of venture capital funding have crashed and burned. While experience is the best teacher, even experienced entrepreneurs still have less than a 50% chance of surviving post-start up. In fact, looking at a variety of sectors and entrepreneur profiles, business survival rates in economically and technologically advanced nations are only between 40-60%.
Growing a business in any market means fighting the odds—but in developing economies, there is a steeper uphill battle.
Looking at it this way, if starting and growing a business is challenging in the world’s most industrialized nations, the odds of success are further stacked against entrepreneurs in the Middle East and Africa. However, these are the places where GroFin and other commercial organizations and NGOs choose to operate—knowing that entrepreneurs face an even higher level of infrastructure, regulatory, financial and human resource barriers but need support.
The World Bank enterprise surveys shed some light on the unique obstacles to business growth faced by entrepreneurs in emerging markets. For example, even relative to similar economies, entrepreneurs in Ghana and Uganda struggled disproportionately with electricity outages and informal business practices. Their counterparts in Iraq have similar battles, but add-on issues of political stability and land access constraints. In Jordan businesses may have a more peaceful environment than their neighbors, but they too have their own burdens with high tax rates and difficulty in accessing capital.
The point is that growing a business in any market means fighting the odds—but in developing economies, there is a steeper uphill battle. From bribery to water shortages to non-existent roads to disappearing workers, emerging market entrepreneurs face a complex set of variables.
We can’t control the electricity outages in Uganda or the political climate in Iraq—we can only help companies improve their odds by building their capacities.
This is why GroFin business support is designed specifically to address the needs of businesses operating in emerging market. We, don’t do a generalized business plan—we provide customized solutions. We help clients build a tool kit, and with time, more competitive businesses. That tool kit begins with our preliminary risk assessment and business plan guidance. In order to pass due diligence, entrepreneurs are also assessed using GroFin Formalization and ESG (environmental, social and governance) tools. Our Formalization tool addresses business management systems and legal/ regulatory risks. It helps usher businesses towards becoming more professionalized and creditworthy by tracking progress on indicators such as financial reporting, succession planning and organizational systems.
Our ESG tool explores compliance with best practices in sustainability. These indicators are adjusted according to the business sector and include indicators of environmental protection to worker health and safety. With the level of complexity in their markets, our entrepreneurs don’t always have opportunities to explore international trends for sustainability so we bring this information to them.
We can’t control the electricity outages in Uganda or the political climate in Iraq—we can only help companies improve their odds by building their capacities. And that’s the commitment we work towards every day.